viewMincor Resources NL

Mincor's result reflects a return to better days for sulphide nickel


Ross Louthean, Mineweb.com

Mincor Resources NL (ASX: MCR) transformed a first half loss in 2009 of A$22.7 million (US$20.4m) into a A$14.2 million (US$12.8m) profit - a 245% increase in earnings before income tax and depreciation and amortisation.

The Australian nickel mining industry was hit hard first by the late 2008 global financial crisis and then by the slow recovery of the nickel price, and this saw laterite projects hit hardest - culminating in BHP Billiton mothballing its Ravensthorpe project and later selling it to Canada's First Quantum.

High grade sulphide nickel mines in Western Australia struggled and then fought their way through the phases of a low nickel price but even Mincor was compelled to mothball its lower grade mines.

The company said today its return to significant profit had been helped by an 8% reduction in cash operating costs and a 32% increase in the nickel price.

It retains A$107 million (US$96.3m) in working capital, including A$99 million (US$89m) in cash and, ending December with no debt.

For the half year Mincor produced 6,175 tonnes of nickel-in-ore for 5,611t of nickel-in-concentrate, taking the full year tally to 10,155t of nickel-in-ore and 8,976t of nickel-in-concentrate. Cash costs for the December half were A$5.29/lb (US$4.76/lb).

Mincor continues to operate its successful Otter Juan, McMahon, Mariners and Carnilya Hill nickel mines, and retains the optionality of its original flagship, the Miitel mine, which is currently on care and maintenance but capable of a "rapid and low-cost return to production."

Managing Director David Moore said: "This is a good financial result and reflects the benefits of our disciplined and focused response to last year's financial crisis, and the dramatic impact this had on the nickel business globally.

"We adjusted our cost base in response to the crisis and have been able to preserve these benefits into the recovery period, enabling us to take full advantage of the improvement in nickel prices seen during the first half."

Moore said Mincor has the flexibility to quickly ramp up production in response to market conditions.

"While exploration within our core Kambalda nickel business will provide the main impetus for our near- and medium-term growth, we are placing increasing emphasis on our regional exploration and other business development activities, and hope to see substantial growth in our asset base outside Kambalda over the course of the coming year."

Mincor is currently pursuing growth options at its Tottenham copper project in New South Wales as well as a major zinc exploration programme in Western Australia and the Northern Territory, in tandem with the Japanese Government entity, JOGMEC.

Production from Mincor's currently operating mines is expected to be between 12,000 and 13,000t of nickel-in-ore for the 2010.

All ore mined by Mincor and by the other two Kambalda miners - Independence Group NL (ASX: IGO) and Panoramic Resources Ltd (ASX: PAN) - is delivered sold-at-the-door to the Nickel West concentrator at Kambalda, owned by BHP Billiton.

There has been media speculation in Western Australia that BHP may place Nickel West on the market, which includes a smelter near Kalgoorlie, a refinery at Kwinana, south of Fremantle, and nickel mines in the north eastern goldfields. However, it may be only the mines placed on the market, not the smelting and refining capacity.



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